Kenya

Client wants NBK’s Islamic banking shut in Sh3.7bn row

In #Kenya a National Bank customer has asked the High Court to shut down the lender’s Islamic banking wing while demanding Sh3.7 billion compensation over a loan repayment dispute. Tulla Reserve Supplies claims National Bank illegally changed his facility from a fixed term loan to a revolving musharaka loan, effectively raising the interest rate from 18.5% to an Islamic profit-sharing equivalent of 19.5%. Director Diba Hussein Dado holds that the alleged switch to a revolving musharaka loan left his firm owing Sh922 million to National Bank. His firm supplied grains to Kenya Prisons, Unga Limited and World Food Programme (WFP). But National Bank insists that the contracts it signed with Tulla were for revolving facilities and Mr Diba has opted to feign ignorance in the hope of building a case against National Bank.

Sharia-compliant Helb loans plan for Muslim students

In #Kenya the Higher Education Loans Board (Helb) has announced plans to introduce a Sharia-compliant product as a growing number of Muslim students join local universities. Helb CEO Charles Ringera said the proposal is contained in a Bill that is currently with the Attorney-General Githu Muigai for review. The new product will most likely assume the structure of Takaful finance. To roll out such a product, Helb will have to come up with special loan forms that require beneficiaries to commit that they will repay a Takaful contribution for the benefit of future students.

CMA Banks on Islamic financing to address interest rates law shocks

The Capital Markets Authority (CMA) of #Kenya is banking on introduction of non-conventional financing options. According to CEO Paul Muthaura the move aims to absorb anticipated economic shocks arising from capping of interest rates. Last week, President Uhuru Kenyatta assented to the Banking Act 2015, which will cap interest rates to not more than 4% above the Central Bank of Kenya rate. The CMA plans to introduce Sharia financing where interest rates don’t feature but have an element of risk management. The CMA is also working on establishment of a Sharia Board that would screen all the products being offered so that it can determine their suitability to be treated as Sharia products.

Learn about the interest free Islamic Banking

The growth of the Islamic finance industry has generated considerable interest and discussion in the financial world markets in recent years. According to a Senior Lecturer at the University of Nairobi School of Business Abdulatif Essajee, lack of information has inhibited the growth of the sector in Kenya. He projects a 25% growth in the coming years. The fastest growing segment in the world is the Issuance of Islamic bonds (Sukuk). In Kenya, the fastest growing segment is Islamic banking.

Gulf African Bank: Why we don't lend to casinos, breweries

In #Kenya the Gulf African Bank has ambitious expansion plans for the local market. The bank, which is so far only represented in five counties, plans to open ten new branches between 2016 and 2017. Follwoing Sharia rules, the bank does not finance casinos, breweries and anything that is hazardous to the human body. Gulf African Bank is stable and prepared to increase core capital which now stands at Sh3.8 billion. At the end of the year the bank's capital will be above Sh4 billion, while by 2017 above Sh5 billion.

What’s hindering Islamic finance growth in #Kenya?

Kenya has a higher percentage of Christians compared to Muslims, but this country is seeing a surge in Islamic financing. According to Rahma Hassan Hersi, Managing Partner at Awal Consulting, the lack of regulations is deterring potential growth. There is a need to address this issue in tandem with the central bank. There is also very limited expertise. The penetration of Islamic finance in Kenya is estimated at 2% with a limited number of banks and insurance companies playing in that space.

Banking: Dubai Islamic Bank aims to open in Kenya

Dubai Islamic Bank (DIB) plans to be operating in Kenya before the end of 2016, despite the Kenyan authorities' moratorium on issuing new banking licences. Kenyan banks have come under closer scrutiny from the regulator because of increasing bad debts, prompting officials and analysts to conclude the sector is ripe for consolidation. Three medium-sized and small banks have been taken over by the regulator since August last year. DIB had been in talks with the regulator before the moratorium was placed on the licensing of new commercial banks last November, meaning it would not affect a decision on its licence.

Banking on faith

A report in one of the dailies suggesting that Islamic banking contributed to the collapse of Chase Bank is based on unfounded information. The facts as emphasised by Central Bank of Kenya Governor Patrick Njoroge are clear; that the underlying reason for the closure of the bank was under-reported insider lending by the directors and irresponsible use of social media, which accelerated the massive liquidity problems. Chase Bank is not the first bank to collapse and several others, which had no dealing with Islamic banking, have gone under. It is therefore insensitive to blame the collapse of Chase Bank on the Islamic banking system, which has proved to be an alternative and viable finance system.

UPDATE 2-Kenya reviews Islamic finance laws ahead of debut sukuk

Kenya is reviewing all laws and regulations governing its nascent Islamic finance industry to aid the issuance of a debut Islamic law-compliant bond, its attorney general said. The East African nation, which issued its first Eurobond in 2014, wants to expand the range of financing available for infrastructure projects like roads and power plants. The Treasury has said it is looking at the possibility of issuing the sukuk in the 2016/17 fiscal year, starting in July, but it has not offered details. Githu Muigai the review of that entire regulatory framework will be completed in a maximum of nine months. Kenya's central bank licensed two shariah-compliant banks in 2007. At least one firm has since started to offer Shariah-compliant insurance products.

Kenyan government to institute Islamic Finance

Kenya is preparing to allow the use of Islamic finance, and is even preparing to launch its first sukuk. Speaking at the International Islamic Finance conference of Africa in Nairobi on Monday, Treasury Secretary Henry Rotich said that the Kenyan government would adopt legislation that would make Islamic finance possible. The conference is intended to aid developing countries in Africa to tap into the $2.1 trillion market of Islamic finance, using it as a catalyst of economic growth. Kenya can learn about the application of Islamic finance by taking advice from Muslim countries, Rotich said. Policymakers’ business leaders and government officials spent Monday and Tuesday speaking on how Islamic financial principles can help combat poverty and alleviate poverty in Africa.

Islamic Financing Will Spur Economy

President Uhuru Kenyatta is hosting two leaders of Africa’s Ieading economies, Muhammadu Buhari of Nigeria and Abdel Fattah el-Sisi of Egypt. These visits are to be viewed within the prism of Uhuru’s broader strategy of economic, trade, and cross-cultural bridgebuilding. They underline his growing clout not just in trade and commerce, but also in the cut-throat arena of global geopolitics and nuanced national interests. The booming African Islamic economy provides an opportune vehicle to ameliorate the deprived conditions and lack of economic opportunity. It is a perfect fit for our infrastructure financing needs. Uhuru signed three agreements and four MoUs to promote trade between Kenya and Nigeria in June 2014 – on Trade and Agricultural cooperation, immigration and drug trafficking. A Joint Business Council was formed.

IIUI holds international moot on Islamic finance

Speakers at a conference have urged the financial institutions and civil society to play their role by supporting an inclusive financial sector policy framework for equal access to financial services.
The workshop, which was attended by the scholars of Indonesia, Nigeria, Kenya, Kingdom of Saudi Arabia, Uganda, Sudan and US, is focused on bringing forth recommendations that will help in devising sustainable strategy for development of inclusive finance.
The two-day moot is jointly organised by International Institute for Islamic Economics of IIUI in collaboration with Islamic Research and Training Institute, Islamic Development Bank, Jeddah.
Speaking on the occasion as the chief guest, Islamic International University Islamabad President Dr Ahmed Yousif Al-Draiweesh stressed on the Muslim economic researchers to work for devising strategies for an interest-free transparent economic system. He was of the view that financial issues be observed in the light of Islamic teachings. The IIUI president hoped that conference would bring beneficial and significant recommendations pertaining to the financial and economic issues.

Kenya to host first East Africa Islamic Finance Summit

Kenya is set to host the first East Africa Islamic Finance Summit (EIAFS2015) that will be held on December 14th at Nairobi’s Villa Rosa Kempinski. The Cabinet Secretary for Treasury Henry Rotich will give a presentation on Kenya’s role in developing East Africa as an Islamic Finance investment destination. The summit themed “Unveiling opportunities”, aims to initiate dialogue, build network between East Africa’s financial institutions, policy makers and the Islamic Finance institutions in the region and the Middle East. Experts in Islamic Finance will discuss the development of Islamic Finance in East Africa, explore infrastructure projects in the region and discuss alternative opportunities for project and trade finance for both public and private sector projects.

Kenya: Islamic Finance Prospects in Africa Promising

Africa's strong demand for Islamic financial services and products was highlighted in the inaugural Africa Finance Forum 2015 held in Abidjan. Recent developments have seen African governments focusing more on creating a more enabling environment for sukuk issuances. Those that have not tapped into the sector have expressed keen interest in the market for infrastructure financing with legal frameworks underway to promote sukuk issuances. Although the Islamic financial services industry in Africa is currently dominated by the banking and sukuk segments, growth potential remains in the asset management and Islamic insurance. However, financial inclusion still remains the greatest challenge.

Kenya regulator opens takaful market to conventional insurers

Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya join the countries such as Pakistan and Indonesia in allowing takaful windows. Kenya's first full-fledged takaful firm was launched in 2011, Takaful Insurance of Africa. Islamic lender First Community Bank also operates a takaful scheme while Kenya Reinsurance Corp has developed a sharia-compliant reinsurance product of its own.

Kenya regulator opens takaful market to conventional insurers

Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya allowing takaful windows, which enable firms to offer sharia-compliant and conventional products side by side. The rules require separate financial reporting requirements for takaful windows from their parent firm, and their operating model must be approved by a board of religious scholars. Operators must also maintain separate takaful funds for their general and life businesses.

KCB Group formally launches its Islamic banking window

The Kenya Commercial Bank (KCB) Group has launched its Islamic banking unit as it seeks to tap into the growing demand for Islamic financial products across the East African region. The launch paves the way for the full roll-out of Shari’ah-compliant products under the proposition dubbed ‘KCB Sahl Banking’, after KCB received all the necessary regulatory approvals. In addition to the Kenyan operation, KCB Bank Tanzania is offering Islamic Banking services supported by the regulatory framework that is in place. For a start, KCB will roll out the Islamic Banking products in six of its branches as ahead of a national roll-out.

Growing demand for Islamic financial products across East Africa

Kenya Commercials Bank (KCB) Group has launched its Islamic Banking unit as it seeks to tap into the growing demand for Islamic financial products across the East African region. KCB Group Chairman Ngeny Biwott said the move is aimed at tapping investments in the Islamic financial sector to help spur capital flows. Biwott said the launch is part of the Bank’s long term vision to diversify its product offering while riding on technology as it reaches out to more citizens across the East African region and beyond who feel left out by the conventional banking system. In addition to the Kenyan operation, KCB Bank Tanzania is offering Islamic Banking services which is well supported with the regulatory framework that is in place.

Entry of Dubai based bank stirs up Sharia banking

Dubai Islamic Bank (DIB) is set open operations in Kenya, in what could be the start for Gulf-based lenders scouting for growth outside their home markets. The Emirate's largest Sharia-compliant lender has started head-hunting top managers for its Nairobi unit. DIB Kenya said it is obtaining a banking licence from the Central Bank of Kenya (CBK). DIB Kenya Ltd has been issued with an approval-in principle- to operate pending completion of the licensing process. The lender is seeking qualified persons in multi-nationals and local banks in Kenya to fill some 36 top and middle level positions within the bank.

Search begins for new Kenya central bank governor

Dr Haron Sirima is likely to be appointed the new Central Bank of Kenya Governor following the expiry of Prof Njuguna Ndungu’s term on Tuesday. Sirima, whom analysts gave a nod ahead of fellow nominees, is currently the Deputy to Ndungu who has been at the helm for eight eventful years. Geoffrey Mwau, Economic Affairs Director at the National Treasury, Isaac Awuondo, Managing Director of Commercial Bank of Africa, and Rose Ngugi, an adviser at the International Monetary Fund make up the broader list of nominees. President Uhuru Kenyatta will announce the latter’s successor once approval has been sought by Parliament.

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